Businesses switch marketing budget from traditional media to social networking: Report

Australian businesses are now embracing social media more than ever, a new Nielsen report has found, with the amount of organisations intending on using social networking within their business nearly doubling within the past two years to 70%.

The Nielsen-Community Engine 2010 Social Media Business Benchmarking Study confirms the sentiment of industry experts, who have said over the past year businesses are no longer querying whether they should use the medium, and are instead actually moving forward with social marketing plans.

The survey reflects that trend, finding a total of 63.5% of respondents agree that businesses should be asking “how” to use social media, and should no longer be wondering “if” they should set up social networking sites.

Businesses are also taking social media more seriously as a marketing tool. More than half of large businesses, (more than 100 employees), are allocating funds away from traditional media to social networking.

About 47% said they moved funds away from print, while 15% said they moved funds away from television.

But while 21% of larger businesses said they would expand marketing budgets to include social media in the future, and more than three quarters say they intend to adopt social media, SMEs are adopting the trend faster than any other group.

The study found 70% of all businesses intend on using social media this year, compared to just 40% in 2008. Additionally, the survey found 32% of SMEs, (noted as less than 100 employees), used social media in 2008, but now that figure has risen to a massive 67%.

Among those businesses already using social networking, the vast majority say they will put 5-20% of their marketing budget to social media.

But companies are also recognising the impact their social media presence will have on their sales. Half of the respondents said if they do not have a social media presence they will risk their relationship with customers, with 62% of big businesses claiming that view.

Additionally, separate Nielsen figures show the number of consumers engaging with companies through social media has increased from 23% in 2008 to 38% during 2009.

More than one third of larger businesses and 27% of SMEs said they prefer to use their social networking as an extension of their website, not as a totally separate entity. Additionally, 77% said the reason for this is so they can control the information being gathered on social media platforms.
About 26.5% of Australian businesses have a Facebook presence, with 17% on Twitter, 10% on YouTube and 5% on MySpace. Community Engine managing director, Piers Hogarth-Scott says the figures show social media is no longer an option in business – it is a requirement.

“Businesses need to be where their customers are. If you look at this purely from a business perspective, it’s clear that social networking is arguably the opportunity of a generation in terms of creating a long-term connection with your customers.”

“Traditional media works in short campaigns. It starts with a certain date, ends with a certain date and then you need to start all over again. Social networking adds a specific long-term presence and negates that traditional form.”

Hogarth-Scott says the consumer base is changing, and businesses must change with it. Instead of directly speaking with consumers, businesses must now interact with many consumers at once and provide opportunities for consumers to interact with each other, and essentially, become brand advocates.

“The most powerful form of selling products or services is no longer business-to-consumer, but consumer-to-consumer. It is the power of word-of-mouth.”

The survey also found businesses aren’t being restricted to third-party social networks. About 20% of respondents said they are looking at creating their own networks apart from sites such as Facebook.

But while many businesses understand the impact social media can have on their relationships with customers, many businesses are struggling to find how they can earn money while using these sites. The study found 29% of respondents had not measured their ROI from social media activity, or had no idea how.

“It takes some time on any new medium to really work through those issues. I remember when the internet became a viable consumer tool, and marketers were saying the same thing. They were asking, “how do we measure this?”

“It’s a natural question for businesses to ask, but I really think it is different for each business and it will take some time. However, one thing is for certain – this is the internet, and there has never before been a more measurable medium. It’s just a question of time.”